Bluetooth Dropping When Outside

I have an older iPod Nano that I use to play music while at the gym or working around the house. I don't like having a massive device in my pocket so I have continued to use the iPod. The internal headphone jack has gotten so worn that it won't keep a connection with a wired headphones anymore.

So I have started using bluetooth instead. It works great in the car or in the house, but the second I step outside, even if I am not moving, it starts cutting in and out and eventually just drops.

What is the solution for this? Do I just need better headphones? They have stopped making this particular iPod and anything of similar size doesn't have enough storage for the 3K songs I have on this thing. Help!